April 13, 2011 11:35
Korea Aerospace Industries has been selected as the preferred bidder for Indonesia's next supersonic trainer jet, raising expectations for the first ever export deal for the homegrown T-50 Golden Eagle. KAI chief Kim Hong-kyung told the Defense Ministry on Tuesday that the Indonesian government notified it of the decision and asked to start negotiations for a final contract.
The two sides apparently hope to sign a memorandum of understanding in the next nine months.
"A deal with Indonesia would make Korea the world's sixth exporter of supersonic aircraft after the U.S., Russia, Britain, France and Sweden," Kim said. "It's a phenomenal achievement for Korea to win the bid against Italy, Russia and other countries that are more than 90 years ahead of us in terms of aerospace technology."
Kim added Indonesia has a track record of procuring arms from both the former Soviet Union and the West, making it especially remarkable that it has opted for an Asian defense firm.
The selection as preferred bidder significantly raises Korea's chances of clinching the deal by ensuring exclusive negotiating rights. The government is pushing for the export of 16 Golden Eagles worth US$400 million (US$1=W1,095). KAI plans to start negotiations in the next one to two months over specific terms, including volume and price, and expects delivery to start in 2013.
There is a huge global market for supersonic trainer jets with 104 countries presently operating around 6,200 of them to train their pilots. Industry insiders expect demand for around 3,000 trainer jets by 2030, either to expand existing fleets or to replace aging ones. KAI hopes to grab 30 percent of that market or around 1,000 trainer jets.
Since 2005, Korea lost out on two export bids when Singapore and the United Arab Emirates both opted for Italy's M-346, leading to criticism that the plane is too expensive. "The export of the T-50 to Indonesia will serve as an opportunity for us to overcome the limitations of the domestic market and boost our slice of the pie, thereby elevating our aerospace industry as a major export industry," a KAI official said.
In October last year, Indonesian officials awarded the highest points to the Yak-130 made in Russia, which has close political, diplomatic and military ties with Indonesia. But in November KAI took drastically slashed the price of the T-50 to less than $25 million per jet with the consent of engine, electronics equipment and other parts makers. Around that same time, a Yak-130 crashed, apparently raising concerns among Indonesian air force officers. And a summit between the leaders of Korea and Indonesia in December apparently boosted chances of the T-50 as the preferred trainer jet.
In February, the deal looked likely to suffer a setback when Korean intelligence agents were caught in the hotel room of a visiting Indonesian government delegation, but Jakarta chose the T-50 nonetheless.
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